2010 Predictions

The folks at MiBiz.com asked me to one of their guest columnists on what to expect in 2010. You can read my column here.

As you will read, I don’t see any big changes in the year ahead. Yes the national economy will improve. And so will Michigan, but we will continue to lag the nation. That includes West Michigan–where MiBiz is located. We have not done anything to reverse the trends that have made this such an awful decade.

As I wrote, the issue in 2010 is not what can we do to turn things around quickly. The answer is that policy makers and community leaders don’t have any levers powerful enough to make an immediate difference in the economy. What matters is what decisions we make to put Michigan back on a path to prosperity over the long term.

Its not what we want to hear, but its reality. There is no quick fix for what ails the Michigan economy. Our fundamental problem is that we have been slow to adjust to the new realities of a flattening world. A world where growth in advanced economies is increasingly knowledge-based and where talent is the asset that matters most.

The Michigan turnaround, compared to the nation, will start only when we focus on improving our ranking of thirty fourth in college attainment. That is our fundamental challenge! Low education attainment regions and states will be low prosperity regions and states. In our case, more than likely, one of the ten poorest states. We can do better! But it will require us letting go of what made us prosperous in the past and getting on a new path: one that is aligned with the new realities.

Lou Glazer is President and co-founder of Michigan Future, Inc., a non-partisan, non-profit organization. Michigan Future’s mission is to be a source of new ideas on how Michigan can succeed as a world class community in a knowledge-driven economy. Its work is funded by Michigan foundations.

This Post Has 6 Comments

Health and pension reforms for state workers is needed. Can’t keeping taxing and feeing Michigan residents to cover these over generous benefits. Hurts Michigan’s economy and hard hit families. It’s time for some genuine sacrafice by public sector unions(monopolies). Private sector employees have lost far more.

I agree we are going to have to reduce compensation for state and local government employees and retirees. Not because its the right thing to do – public employees do important work and should be well compensated – but because we can no longer afford it. When you go from eighteenth to thirty seventh in per capita income in eight years you can no longer afford to be a high public employee compensation state.

But as I wrote in my previous A Budget to Grow the State Economy post just cutting public employee compensation is not enough. We also will have to raise and restructure taxes and make structural cuts in programs. All three are needed both to balance the budget and, more importantly, create the revenue for the public investments in education and quality of place which are essential to returning Michigan to prosperity.

Blah blah blah!! You people want to turn Michigan around?!? Tell your fellow Senators to undo all the trade agreements that sucked the jobs out of our state! I’m tired of reading this endless propaganda by “experts” and the media about converting ourselves into a KNOWLEDGE based workforce! When will anyone understand that it’s American labor as a whole,that is under attack. There are people around here with college degrees, who still can’t get a job!Instead of preaching more education, preach Patriotism to corporate CEOs who think it neccesary to get cheap labor from China.

Ross Perot was right about everything on the national level. The “unfair” foreign trade balance will conquer us if left unchecked. Executive Corporate Greed has robbed our Nation of jobs, and more recently “our own tax dollars loaned to them”. Small businesses are going broke. They bare most of the burden from State regulation, an “absolute useless” DEQ, Michigan “penalty for being in” Business Tax, and a totally anti-business Personal Property Tax. Michigan as a whole is an anti-business State. Businesses will locate where they don’t have to deal with a state regulator putting up road blocks and where they don’t feel the government constantly reaching in their pockets. Working in the public sector has become the dream job of our time. The public sector is much easier work, pays more, has wonderful benefits, including health and retirement. Small businesses are throwing in the towel when they see the numbers feeding in the public trough. When we can not pay back the loan to China in dollars, which of the 50 States do we hand over to them as payment?

Boy Steve, you are one angry guy. Let’s look at what you say:
DEQ “useless”. Well, if you fished on Michigan rivers, or lived near a toxic waste site, of which Michigan has many due to a DEQ that didn’t do its job in the past, you might disagree. But can you give me a specific example of why you consider the DEQ “useless.”
Michigan is an “anti-business” state. When did that start? In 1999, we had very low unemployment and good wages. The state’s cut taxes and regulations, by and large, since then, and unions are on the run, accepting $14 an hour for new Ford workers. Were we anti-business in 1999? If not, what happened since? Is it the state that is at fault…or businesses owners and managers, particularly those associated with the the Detroit auto industry.
Is public sector work easy? Police officer? Investigating child abuse? Prison guard? The top lawyer in the Attorney General’s office makes about $115,000 a year — and goes up against the best private sector lawyers making five times that much.
The personal property tax burden has been reduced dramatically under our new Michigan Business Tax. Not eliminated, but reduced.
Today Michigan’s state and local tax burden is exactly the same as Indiana, according to the Tax Foundation. I’m one business owner who isn’t buying the idea that closing schools, raising tuition, laying off police officers and ignoring child abuse is the answer to our state’s problems. But if you support cutting taxes, that’s exactly what you are endorsing.

I think if we start with the premise of Mr. Glazer’s writings of prosperity for Michigan as a goal we can all rally around then we can stay away from anger and personal attacks. I freely admit failure at that on a fairly consistent basis.

My prediction for 2010 is that a tsunami of protectionism is on the horizon. This is not at all unique to Michigan. It is a global phenomenon. Empires throughout history have failed. They fail because at a discrete tipping point local cultures and societies feel alienated and cheated from the whole in very real and in historically violent ways.

In our present time it is clear that the American empire has failed and is rapidly winding down. The corporate empire is leveraging itself to take over that void. It will not be any more successful than any other empire in history and in fact will end very quickly. The sad fact is that we did not win the cold war. The Soviet Union simply lost first.

While I tend to agree with Ricks comments on the hell free trade has caused and with Steve’s comments on Ross Perot’s vision of what was coming with free trade. I take issue with his regulatory concerns. I have seen no evidence from the business I run or many others that I am familiar with that feel even the slightest problem with doing business and being extremely profitable in Michigan. Barriers to making a business profitable in Michigan due to regulatory restrictions or tax liability are a nonexistent fantasy. Barriers to making a business profitable in Michigan or anywhere are due a historically dangerous consolidation of wealth that creates severe disruptions in social cohesion. That is the MAJOR problem. It is all set to rip apart and begin anew.